I'm not much of an economist or speculator, but I was curious to get this groups input on a thought of mine:

Looking at the Bitcoin "Total Hosts" graph hosted at http://bitcoinstatus.rowit.co.uk/ , it makes me wonder if Bitcoin isn't set for a long decline and the price has only remained stable at $5 due to hoarders who won't liquidate because they don't want to be "left behind" when "thing turn around".

You can't deny from those graphs that the network is on a downward trend as far as people actively using Bitcoin. Technical issues that have been brought up years ago as weaknesses in the technology any why it could never be used as a high transaction payment system haven't been addressed.

So I guess to the speculators out there:

1) What's holding the price up if there's a constant influx of mined coins to the market from miners and there is a downward trend on network activity? (Are there that many "dark traders" who don't even have a Bitcoin client and just keep all their funds/coins in their brokerage account?)

2) Couldn't it be said that the longer the price remains constant the more risky it is for someone looking to invest new capital into the system? An example I think of is if someone tomorrow were to pump $1M into MtGox and drive the price up to let's say, $10, there's be an immediate flood of sells on people trying to get a piece of that capital pie and the price would instantly come crashing back down.

You can't deny from those graphs that the network is on a downward trend as far as people actively using Bitcoin.

Yes I can deny that. More and more people are using website based wallets (blockchain.info for example) or alternative clients (Like Electrum). The only thing those graphs prove, is that there are less original Bitcoin clients running, which isn't a good measure of total activity in Bitcoin-land at all.

You can't deny from those graphs that the network is on a downward trend as far as people actively using Bitcoin.

Yes I can deny that. More and more people are using website based wallets (blockchain.info for example) or alternative clients (Like Electrum). The only thing those graphs prove, is that there are less original Bitcoin clients running, which isn't a good measure of total activity in Bitcoin-land at all.

Gotta agree with this one, I don't use the bitcoin client itself much at all.

That can be manipulated easily but the trend is probably fairly accurate. That chart tells more about how actively Bitcoin is being used than the trend of the number of users running as nodes tells. The dropoff in nodes might have been exacerbated from those who were mining solely for the "free money" and now that a good chunk of lower-end hardware isn't productive enough it makes sense that their nodes have since dropped off the network as they've quit mining.

Though Bitcoin isn't gaining huge traction as an ecommerce payment method yet and retail / point-of-sale is virtually nonexistant for now, Bitcoin does seem to be used for international payments and remittances, for speculation and for other uses that let Bitcoin just keep on keeping on.